"I’m too sacred for the sinners/And the saints wish I would leave." - Mark Heard

Friday, March 20, 2009

Onward Ho!

Didja like the kittens? Me too.

Next up, in my reading of New Deal or Raw Deal by Burton Fulsom Jr., are the massive programs that were created in the New Deal. You know, those amazing programs put in place by the brilliant FDR and his Brain Trust that pulled us so quickly out of the Great Depression. Or made it last for another seven to ten years. Not sure there...

The big one was the NRA. No, not those gun-totin' freaks who believe in a little something called the Second Amendment, but rather the National Industrial Recovery Act (the "I" was dropped due to a shortage of vowels). The NRA was an attempt by the Federal Government to set prices and wages so that people were paid fairly and that companies didn't go out of business. Good intentions, right?

Here's what happened.

The large businesses in each industry were told to get together and decide between them on what would be fair. Did they ever! What is fair to a large and bloated business was suddenly discriminatory to the small and innovative businesses. A classic case was the owner Community Dry Cleaners in Cleveland. Their business was further from the center of town and they used lower prices to get customers. Under the NRA this was illegal - everyone had to charge the same price. The owner of the business was fined and sent to jail. If you want some laughs just look into the rules of this terrible legislature (for instance the NRA said that when you bought a chicken you could not pick out the one you wanted, the same went for candied yams).

There were over 500 regulations that made it extremely difficult to figure out what the government wanted you to do, let alone how to legally do it. Sounds like the current tax code.

The unintended consequence of the NRA is that prices went up more than wages. Competition went way down as small businesses were forced out of existence, sometimes at the loaded end of the law. This made output go down so there were less goods, plus higher unemployment.

The NRA was so destructive and horrible that it was ruled as unconstitutional by the Supreme Court a mere two years after it was passed into law. That was a 9 to 0 ruling. When does the Supreme Court ever fully agree on something?

Not to be undone FDR still tried to pass the NRA is smaller forms, telling Congressmen not to be alarmed if it seems unconstitutional. One biggie was a bill that tried to regulate the coal industry. The result? Over 350,000 prices for coal based on size and shape and sexual orientation. Coal ended up costing so much that gas and electricity use skyrocketed and parts of Pennsylvannia nearly went bankrupt. Hmmm... bankrupt the coal industry. Where have I heard that before?